US & World Economies US Economy GDP Growth & Recessions Retail Sales and Their Components Understanding the Economy Through Retail Activity By Kimberly Amadeo Updated on January 20, 2022 Reviewed by Somer G. Anderson Reviewed by Somer G. Anderson Somer G. Anderson is CPA, doctor of accounting, and an accounting and finance professor who has been working in the accounting and finance industries for more than 20 years. Her expertise covers a wide range of accounting, corporate finance, taxes, lending, and personal finance areas. learn about our financial review board In This Article View All In This Article Retail and Its Primary Job Measuring Sales and Trends Retail Categories Reflecting the Economic Environment Frequently Asked Questions (FAQs) Photo: Photo by Sophie Delauw/Getty Images Retail sales involves the purchases of finished goods and services by consumers and businesses. These goods and services have made it to the end of the supply chain, which starts with the goods producer or provider and ends with the retailer. The beginning of the supply chain includes commodities and other raw materials. Manufacturers create the product. The middle of the supply chain is wholesale sales. They distribute the goods and services to retailers. The retailers sell them to the consumer. Key Takeaways Retail sales include sales of services and durable and non-durable goods within a specific time period. Consumer spending is almost 70% of U.S. GDP, making retail sales a good economic indicator. The U.S. Census Bureau publishes data on retail sales every month. Retail and Its Primary Job The retail industry distributes all of these goods and services to customers. Retail outlets include brick-and-mortar stores like Target and Macy's. It also includes online retailers such as Amazon. Retail distribution also includes home sales such as Avon Products and TV retailers like QVC. The retail industry also sells services, including restaurants, hotels, and hairdressers. Note The most critical time in retail sales is the holiday shopping season. Retail accounts for almost 20% of annual sales for many retailers. For jewelers, it accounts for 70% of yearly sales. The holiday shopping season customarily begins on Black Friday, the day after Thanksgiving. It also includes other big shopping days, such as Cyber Monday, Green Monday and every other shopping day through Christmas. Some retailers have a "Christmas in July" sale to stir up sales during the slow summer season. Measuring Sales and Trends The U.S. Census Bureau measures retail sales with the monthly U.S. retail sales report. It reveals total sales, percentage change, and change in year-over-year sales. Note The Census Bureau doesn't adjust for inflation in the Retail Sales report. That means volatile gas and oil prices affect the results. That can be misleading. Gas prices typically rise in the spring. Traders bid up the prices in advance of anticipated demand for the summer driving season. When that happens, it seems like retail sales are skyrocketing. Sales seem to drop like a stone in the late summer or autumn. That's when gas prices fall as vacationers return home. Retail Categories The Census Bureau divides retail sales into 13 categories. The largest category is auto and auto parts stores. Since it's such a large component, the Census Bureau report also shows retail sales without auto. Here are all 13 retail categories: Auto dealers, including auto parts, new and used vehicle salesNon-store retailers, which means online retail salesDepartment storesApparel, such as specialty clothing storesElectronics and appliance stores, including big-box retailers like Best BuyFood and beverage stores, including grocery and liquor storesBuilding and garden supply stores, such as Lowes and Home DepotSporting goods/hobby stores, like Hobby Lobby and Michael'sHealth/beauty shops, including drugstoresFurniture storesHospitality and leisure, including hotels, restaurants, and barsGas stationsMiscellaneous Reflecting the Economic Environment Retail sales tell you how much demand exists for consumer goods. That's critical because consumer spending makes up almost 70% of total U.S. economic output. The three other components of gross domestic product(GDP) are business spending, government spending, and net exports. The Bureau of Economic Analysis releases the GDP report each quarter throughout the year. If each month's retail sales are strong, then it's likely that the GDP report will be solid as well. The only time that won't be true is if prices are rising due to inflation. The retail sales report doesn't adjust for inflation. The BEA's report uses so-called real GDP, which does adjust for inflation. It's worth also looking at year-over-year retail sales in addition to the monthly percentage changes. The GDP report gives an estimate for a year. Retail sales growth since the prior year will give you a better indication of GDP growth which is also compared to the prior year. Frequently Asked Questions (FAQs) What is a retail sales job? Positions in the retail trade industry include cashiers, customer service representatives, salespersons, and managers. These careers exist in many industries, including retailers that sell motor vehicles or parts, appliances, sporting goods, and food stores. What is a general sales tax on retail sales? A general sales tax provides revenue for governments by imposing a tax on all retail sales. The U.S. government does not impose retail sales taxes, but state and local governments do. Alaska, Delaware, Montana, New Hampshire, and Oregon do not impose sales taxes. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. Census Bureau. "Monthly Retail Trade," Download "Advance Monthly Retail Trade Report." Bureau of Economic Analysis. “National Income and Product Accounts Tables: Table 1.1.5. Nominal GDP.” Bureau of Labor Statistics. "Retail Trade: NAICS 44-45." Tax Foundation. "State and Local Sales Tax Rates, 2022."